For the RBA, timing is everything when you're saying very little

In a couple of speeches last week and the governor's brief post-board meeting statement today, the Reserve Bank effectively said nothing new about the economy, the currency, interest rates or, well, almost anything really.

OK, there possibly was one little bit of greater optimism about the labour market today, but that was it.

As a paid-up member of the industry that feeds on RBA watching, I'm alive to the importance of what the bank's heavies don't say on occasion, but they didn't 'not say' anything either – if you know what I mean.

By the market noise and chatter, you could be forgiven for thinking that that wasn't the case, that there was a spectacular and meaningful vacuum where some jawboning over the Australian dollar was meant to be.

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Yet this is part of what RBA governor Glenn Stevens recently said in Hong Kong:

"With the terms of trade expected to decline, the exchange rate could decline further, over time. But with numerous forces affecting the exchange rate – the anticipated gradual decline in resource prices, the sharp decline in resource investment and associated capital inflow, the increase in income payments to foreign owners accruing from strong growth in resource exports and the conduct of monetary policy in major countries – the exchange rate path is highly uncertain."

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Which sounds perfectly reasonable and consistent with what the bank has been saying for many a moon – a little jaw-boning, you might think, but within the limits of our gyrating currency's unpredictability.

And so to today, it is genuinely bemusing that the flighty forex market managed any reaction at all to the board meeting statement. There was no change in emphasis, just more of the same which is what the RBA has been promising us since it dropped the possibility of an easing bias.

Examining the entrails

There's a quick way to divine changes in the RBA's message by examining the entrails of the governor's statement. You compare it, word for word, with the previous month's statement. Thus, when the possibility of another rate cut was dropped, the difference was immediate.

Comparing today's statement with that of a month ago finds little more than a couple of re-orderings.

The governor did add the qualifier "though it may have slowed a little in early 2014" to the previous month's observation that China's growth remains generally in line with policymakers' objectives – nothing to scare a pony in that.

The line about unemployment probably rising a bit more was moved up a couple of paragraphs and did include a slightly more positive view that the rise would "near-term", indicating the bank believes the unemployment rate is close to peaking. And so we all hope.

The governor also added the obvious that, while the lower exchange rate would assist the economy rebalance , that assistance was "less so than previously as a result of the rise over the past few months".

And that's it. Three tiny changes that don't add up to anything that anyone with a vague interest in the RBA's thinking didn't already know. Yes, "on present indications, the most prudent course is likely to be a period of stability in interest rates", which is what the statement said last month.

Exciting the markets

On Thursday the governor has another chance to excite the markets with a speech to be delivered in Brisbane. Like last week's papers and others from the RBA earlier last month, it's likely to provide valuable perspective on our economic journey, on where we've come from and where we should be trying to go to. (Philip Lowe's speech on demographics, productivity and innovation is another must-read for anyone interested in the bigger picture.)

But if you think Glenn Stevens is going to announce a change in monetary policy or magically bend the currency with his mandible, you might also have a view on the role of UFOs in our society.

It seems the RBA is a little sensitive about the "jaw-boning" business anyway, as shown in this exchange with Scott Buchholz during last month's House of Representatives economics committee hearing:

Mr Buchholz: What is 'jawboning'?

Mr Stevens: What is it? Whose term is that?

Mr Buchholz: I do not know. I see it in the press with reference to the exchange rate and I thought I would ask you to explain to me what jawboning the exchange rate is.

Mr Stevens: I suspect these colourful references in the media may refer to the fact that the Reserve Bank, and I personally, have occasionally made some remarks about the level of the exchange rate. I suppose it is assumed that these remarks were made in an effort to move it. I have certainly been prepared to give an opinion. It is a fairly vaguely-couched opinion, as I think it should be with these things, but I have been prepared to say that at various times I thought its long-run equilibrium was probably somewhat lower than where it was trading at the time. That is probably what they are referring to.

Mr Buchholz: Is there anything that the RBA can be doing to lower the exchange rate?

Mr Stevens: Apart from jawboning, which I think has a limited effect, in principle the options would be — and we have covered these in previous hearings — you can lower interest rates, and in principle that is a thing that might be done; you can intervene in the market, and there would be a whole debate about that and there is ongoing debate about how effective that is; and I suppose the biggest thing you could do if you really want to lower the exchange rate, is have a weak economy and say that you do not want foreign investment. Seriously, with strong economies that are attractive to foreign investment, it is likely that you are going to have upward pressure on your exchange rate in that world.

Not wasting a shot

Not much there that isn't obvious about the big, bad exchange rate. We all know the RBA would like the Aussie to be trading with an 8 as the first number rather than a 9, but there's actually not much it can do about it and the bank doesn't like to waste a shot.

Another way of looking at Stevens' admission that he's been prepared to speak up when he thinks the Aussie is particularly overvalued is that RBA types are wary of throwing a currency punch, either in words or on the market, if they think it won't have any impact.

Timing is everything.

Thus, when the dollar looks set to turn the way the RBA would like it, it makes sense to give it a little nudge. When bigger forces are having their way with the currency, there's no point wasting ammunition – devaluing the currency of the jaw-bone, so to speak.

So I'll look forward to reading Glenn Stevens' speech on Thursday, particularly if there's a bit more on the optimism that the unemployment peak is near. But I won't be expecting it to move markets. Well, not rationally, anyway.